Apr 16, 2021 • 30M

How would higher inflation impact retirees?

Rising consumer prices could have implications for withdrawal rates, portfolio allocations and more.

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Appears in this episode

Mark Miller
Journalist and author Mark Miller on getting retirement right - featuring downloadable guides and podcast interviews with nationally-recognized experts.
Christine Benz, Morningstar

This week on the podcast we take a look at the prospect of higher inflation, and how retirees would be impacted.

In March, the consumer price index recorded its largest 12-month increase since the summer of 2018, rising at a 2.6 percent annual pace. Some analysts think we might be entering a period of sustained higher inflation after many years when consumer prices stayed very steady. It’s not at all clear yet that this actually will happen. But if it does, that would mark a real change for retirees, who live on fixed incomes. Higher inflation would threaten to erode their standard of living.

My guest is Christine Benz, director of personal finance at Morningstar. Christine has posted two excellent articles on inflation and retirement in the past couple weeks. One focuses on implications for your portfolio withdrawal rate in the event of higher inflation; the other discusses inflation-fighting investment strategies.

I asked Christine to explain why concern about inflation is rising. We also discussed the major risks inflation poses for retirees, and some strategies that retirees can use to protect themselves from inflation risk.

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